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After the financial crisis in 2008, a lot of people swore to live without credit cards. While this decision is respectable, there are implications of not having credit cards. If you think about it, the presence of these cards are not the problem. It is more of how we ended up using and relying on them too much that got us into this mess. But if you can correct those mistakes, you don’t really have to shun credit cards complete from your life. They do have benefits and you can enjoy them all if you stop to learn the basics of using your credit cards properly.
A lot of Millennials have decided not to use credit cards but they end up having problems with their credit score. For someone who is just building their career, this may prove to be useful in helping them get a job. Getting a credit card is not bad, as long as you follow the rules.
What to do with your first credit card
Owning a credit card does not mean you are doomed to be in debt. You can avoid credit card debt if you really want to. Later on, we will discuss how you will do that. Right now, let us detail the things that you have to do when you receive your new credit card.
Activate the card. The first step is to activate the credit card that you just received. Usually, the new card has a sticker in front that contains the instructions on how you can accomplish this task. Simply follow the instructions and call the number stated on the sticker. Just follow the prompts that the operator will tell you.
Read the fine print. It is important that you read the terms of your new card account and understand it. If there is anything that you cannot understand, call the customer support of the card company and ask until you understand them. Pay close attention to the fees that you have to pay.
Keep the terms. Some people throw away the terms after they read it. This is a mistake. You have to file this document so you have a reference point for anything that will crop up with your credit card account.
Remember your credit limit and due date. These are two of the important details that will keep most of the fees from being imposed on you. If your credit card balance stays below your credit limit - ideally 30% below, you should be in good shape with your credit. Also, if you pay your dues before the due date, you will not be charged with late penalty fees.
Learn about the rewards program on your card. Most credit cards offer rewards to consumers who practice good payment behavior. Sometimes, if you purchase a certain amount at a time, you will get cash back rewards. These are only a few of the things that you can enjoy.
Know the details of any promotional rates. In some cases, a new card account is given a low rate on their card. If this is true in your case, you should know when this promo will expire.
Setup an online account. This online account will enable you to make online payments. That way, missing your payments can be avoided. You can pay even at night or over the weekend to avoid late penalty rates from applying.
Setup up automatic payments. If you cannot setup the online account, use automatic payments to keep yourself from missing your due dates. This means the creditor will get the amount from your account automatically every month.
Keep your credit card from being lost. Credit cards are among the popular means to commit identity theft. Make sure you keep your card in a safe place like your wallet. If you do not want to bring it with you all the time, then keep it in a secure place at home.
Important reminders when using your credit card account
There are various techniques to keep your credit card account from incurring too much debt. It is important that you learn them as it is a great way to practice proper financial management habits.
Stick to your budget. Never use it if it is not in the budget. This will keep you from overspending.
Determine when you will use your credit cards. Stay away from everyday purchases as it can tempt you to spend more than what you intended.
Keep your balance below 30% of your credit limit.
Pay your dues within the grace period of your billing cycle.
We encourage you to do your research to keep yourself from making a mistake in using your credit card. The Consumer Financial Protection Bureau ( consumerfinance.gov) and the Federal Reserve (federalreserve.gov) holds valuable information about credit card rules and regulations. It is important that you know your rights when it comes to credit cards
Here is a video that you can watch to help understand the different fees that you may be subjected to. It is important to know what all these are and how it can affect your credit card balance. It also contains tips that you can use to help avoid these credit card fees.